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Abstract
Development in Africa has been stalled for decades in a vicious cycle of poverty, underdevelopment, corruption, and conflict. In this paper, we argue that donors should focus on democracy and accountability as a first priority in development aid. We use the theory of comparative institutional advantage to identify the key institutions that are most likely to facilitate economic development in communities in the modern world. These institutions include an efficient non-corrupt government sector. Subsequently, we discuss how a lack of democracy and accountability inevitably undermines development efforts and investment, referring especially to the Ethiopian experience but also considering the experiences of other African dictatorships. Finally, we discuss how donors, by emphasizing democracy and accountability along with other policies that support democratic institutions, have a greater chance of effectively contributing to African economic development.
Notes
1 Note that we are using the term “institution” as it is understood in Original Institutionalist Thought, of the type growing out of the work of Thorstein Veblen and John R. Commons. In this tradition, “An institution is a regularity of behavior or a rule that is generally accepted by members of a social group, that specifies behavior in specific situations, and that is either self-policed or policed by external authority. It is important to distinguish between general social roles (sometimes called the institutional environment) and particular organizational forms (sometimes called institutional arrangements)” (Rutherford, Citation1994: 182 n1). New Institutional Economics, in contrast, is a much narrower approach that focuses primarily on property rights, transactions costs, and monetary incentives.
2 One clear example of this phenomena in Africa is capital flight. According to a recently updated estimate on capital flight in Africa, “Between 1970 and 2010 total capital flight from the 33 SSA countries covered in this report amounts to $814.2 billion in constant 2010 dollars. These countries lost $202.4 billion between 2005 and 2010 alone” (Boyce and Ndikumana, Citation2012: 7). This exceeds the amount of official development aid ($659 billion) and foreign direct investment ($306 billion). Ethiopia, one of the poorest countries even by the region's standards, has lost $24.9 billion in capital flight during the same period (Boyce and Ndikumana, Citation2012: 9).
3 See Amsden (Citation2001) for a description of the control mechanisms developed in late-industrializing countries to insure long-run competitiveness and to eliminate long-term dependency on protectionism and government subsidies.
4 Obviously talking about Africa or even sub-Saharan Africa (SSA) as one entity involves over simplification. Clearly there is some heterogeneity in the governance structures that obtain in different African countries including some that are democratic and relatively well governed. We refer to Africa or SSA here simply to indicate the high prevalence of authoritarian regimes in the region. Only nine countries out of 48 in the subcontinent are considered free by the 2012 freedom house rankings (http://www.freedomhouse.org/regions/sub-saharan-africa). This paper focuses on the characteristics common to the authoritarian regimes that dominate the region.
5 We are using the term “orthodox mainstream economics” to refer to the work of economists taking a strict, neoclassical approach to economics, ignoring the key role that institutions play in the development process.
6 For the results of SAPs in Africa in the two decades after the implementation of SAPs and the comparison of this performance with the pre-SAP period, see, for example, Mkandawire and Soludo (Citation1998).
7 For this line of inquiry, see Schneider (Citation2008).
8 For this discussion in the African context, see, for example, Mkandawire (Citation2001) and Edigheji (Citation2005).
9 For a much broader and illuminating discussion on “new dimensions of human security,” see Chapter 2 of UNDP's World Development report, 1994, pp. 22–46. http://www.hdr.undp.org/en/media/hdr_1994_en_chap2.pdf
10 Just note the hope created by the election of Senator Obama to the presidency of the USA in 2008. Despite unrelenting bad economic news, a poll taken in November right after the election found 80% of Americans were hopeful, nonetheless (CNN, December 27, 2008).
11 For the 1999 data, see the report by Habtamu Wondimu on Ethiopian higher education in Boston College's Center for International Higher Education, http://www.bc.edu/bc_org/avp/soe/cihe/inhea/profiles/Ethiopia.htm. For the more recent data, see Reisberg and Rumbley (Citation2010).
12 A very sobering assessment of the state of education in Ethiopia can be found in Forum for Social Studies, “Quality of Higher Education in Ethiopian Public Institutions,” Addis Ababa, Citation2009.
13 Van de Walle characterizes “neopatrimonialism” as having three constituent components. “First, such regimes are characterized by presidentialism, in which both formal and informal rules place one man—usually the president—largely above the law and not subject to the checks and balances that democratic executives face in mature democracies. Second, such regimes rely on systematic clientelism by the president and his immediate followers to maintain the status quo and ensure political stability. Third, and unlike more traditional patrimonial regimes, neopatrimonial systems rely on the fiscal resources of a modern state to provide the resources that are distributed following a clientelist logic” (Nicolas van de Walle, “The Path from Neopatrimonialism: Democracy and Clientelism in Africa Today,” paper presented to the Conference, “When Will African Economies Develop?” 2 May 2008; the New School, New York City). The only point we wish to add to Van de Walle's description is that the fundamental behavior of the regime does not change significantly even when the system is nominally parliamentarian; the strong man is a prime minister at the head of a cohesive ethnic-based political party as in Ethiopia. In this case, the benefits of clientelism go to the party apparatchik, the cadres, and their “private sector” supporters.
14 In one famous incident in 1991, a newly appointed information minister with a high school education (who still held this position in 2012) went to Addis Ababa University's Institute of Ethiopian Studies, lectured the professors on Ethiopian history and lambasted them for being absolutely ignorant about Ethiopian history. In the question and answer period, one of the country's famous historians sadly asked the minister how many of the history books written by the professors in that hall he has read.
15 For example, the Ethiopian government fired some 42 university professors in 1994 simply because it did not like their political inclinations. Thousands of parastatal employees and teachers were also dismissed for similar reasons by federal and local governments.
16 The late prime minister of Ethiopia, Meles Zenawi, once famously said on national television, that the ruling party can appoint even an illiterate security guard to a high position, in so far as the person is loyal to the ruling party.
17 Foreign scholarship and even graduate programs at Addis Ababa University, for example, are offered only to those that have a written recommendation from a government institution or the ruling party. There is no open competition on the basis of capability.
18 It is, for example, a standard scene in many offices of government functionaries in Ethiopia to see unused desktop computers donated by aid agencies gathering dust.
19 In one recent and internationally known incident, the prison authorities simply refused to implement the court's decision to allow visitors to see Bertukan Mideksa, a known political prisoner. This is a right mandated in the constitution of the country. Despite repeated appeals by lawyers and even diplomats to the court to implement its decision, the court could not do anything about it.
20 A 2009 State Department's human rights report mentioned the beating of an MP in one of the regions of the country, among many such rights abuses. The Ethiopian government prepared a long televised report to “refute” these allegations. Among its proof that the State Department report was a lie was a video clip of a person claiming to be the MP and asserting that the report was a lie and that he was never beaten. After seeing this report on television, the real MP came out in a local private newspaper saying that the government's report was an absolute fabrication and that the person who appeared on TV was a total imposter. Another very recent example relates to the jamming of the Voice of America. When the Deputy Minister of Information, Shimelis Kemal, was asked about the reported jamming in a press conference, he very strongly denied that his government would do such a thing, that this is prohibited by the constitution and that those who are making these allegations are simply smearing the country's reputation as a democratic country. Two days later, when the former Prime Minister was asked the same question, he said with a straight face that his government is jamming the program because it is destabilizing the country. These blatant fabrications and contradictions are simply accepted by the population to be the modus operandi of government officials and the government-controlled media.
21 During the transition from the former OAU to AU in 2002, a management consultant that evaluated the competence of the personnel working in the institution found almost all of the employees professionally incompetent save for a handful.